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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: Step1 who wrote (1643)	12/9/1998 1:40:00 AM
From: chirodoc	Respond to of 3902

Japan urged to buy up to 10% of stock market By Gillian Tett in Tokyo An influential Japanese business group has called on the government to issue up to ¥30,000bn ($250bn) of bonds to purchase corporate shares and stave off a further decline in the stock market. These plans, which have been drawn up by a think tank affiliated to the Keidanren, Japan's main business federation, would potentially leave the government holding up to 10 per cent of the shares on the stock market. The proposals, by the respected 21st-Century Public Policy Institute, have triggered strong opposition from officials at the ministry of finance and the Bank of Japan, who fear that it could put more pressure on the government bond market. However, the idea is supported by some members of the ruling Liberal Democratic party, whose politicians have often used respected business groups such as the Keidanren to float radical new policy ideas. Although the LDP leadership has shown little willingness yet to adopt the scheme, the proposals highlight the degree of unease felt in the government about the weakness of the stock market. Government officials admit that the proposals could influence policy in coming months if Japan's economic problems worsen. One senior bureaucrat said: "If the stock market falls again, there may be more support from politicians for something like this." Mayasa Miyoshi, a senior adviser to the Keidanren, said: "We urgently need to take measures." The debate about the stock market has been triggered by the recent sharp fall in the Nikkei 225, the key stock market indicator, which fell below 13,000 in October. This threatens to hurt many companies, since banks and their clients have traditionally held huge equity stakes in each other. The Nikkei 225 has since rebounded, closing at 14,808.2 yesterday. However, some officials fear the market will remain weak, since many companies are trying to unwind these cross-shareholdings, further depressing prices. In recent months, the Keidanren has called on the government to offset this problem by creating a special institution to unravel unwind cross-shareholdings without selling shares them in the open market. However, this proposal has now been partly abandoned since it would reduce the banks' capital base under current Bank for International Settlements guidelines. The think tank has now proposed a separate scheme according to which the government would purchase shares to offset the impact of companies unwinding cross-shareholdings.

To: Step1 who wrote (1643)	12/13/1998 6:21:00 PM
From: FACTUAL	Read Replies (1) \| Respond to of 3902

Based on the PPP ( Purchasing Power Parity ) Theory the yen is still high and consumer products prices can still fall. Relatively speaking the yen has strengthened vis-a-vis its consumer products suppliers ( China, Korea, Thailand, Malaysia, Australia, Taiwan ). Thus price destruction should continue. Is internet shopping taking off in Japan? Applicability of US style resolution to the Japanese banking crisis is limited. Most Asian countries do not culturally have an adversarial process ingrained but rather are governed by Mandarins. Thus the apparatus (e.g. lawyers ) simply does not exist. All the lawyers in Japan may be able to handle all the problems of say a single jusen. But the system at large will have to economically grow out of it unless a combination of external pressure and internal power balancing make some resolution feasible. The economic crisis in Japan may worsen if the Chinese devalue ( the other option being for the Chinese to continue their current Ponzi scheme in the construction sector ), and/ or the situation in Russia does not get better. Should the Fed raise rates or the ECB stay with its original mandate, substantial relief in Japan wil be indefintely delayed. Property in Asia and Japan still do not factor realistic market prices. If they do ( which is unlikely ) plan on a major depression. All this suggests that fiscal stimuli are not appropriate- perhaps radical action on the monetary front is required which will almost certainly have unpredictable and nasty surprises. Understandably the government has elected to try and grow their way out of this. I remain puzzled as to why there is an expectation that Japan will turn in two years. It may, but I cannot see the reasons why. Merry Christmas